Virginia’s April revenue exceeds forecasts

April revenue collections in Virginia exceeded budget forecasts, growing 45.7 percent over April 2021. General fund revenues were about $1.9 billion higher year-to-date than the mid-session revised forecast issued in February, and total revenue collections in the state have risen by 19% through April, ahead of the revised annual forecast of 9.2% growth.

“Virginia’s economy continues to show encouraging signs of growth. We’re growing jobs, growing paychecks, and more people are joining the workforce,” said Gov. Glenn Youngkin. “This report confirms the strong trajectory forecasted for state revenue and we continue to see mounting evidence that the time is now to cut taxes. Inflation is stealing more money from the paychecks of hardworking Virginians, who are paying near-record prices at the pump and we know there’s plenty of money in the system to reduce taxes and lower the cost of living in the commonwealth.”

In percentage terms, payroll withholding and sales tax collections grew 4.8% and 8.4% in April, respectively. Fiscal year-to-date, withholding revenues are up 9.5%, ahead of the full-year forecast growth rate of 9%, and sales tax collections are up 14.4%, ahead of the annual 11.4% forecast.

“Much of the extraordinary year-over-year growth in April in non-withholding collections was driven by the change in the federal tax filing date back to April in 2022 versus May in 2021,” said Virginia Secretary of Finance Stephen Cummings. “We will need to look at the combined results of April and May compared to last year to know the overall trends in this category. However, general revenue categories unaffected by that timing difference, mainly payroll withholding and sales tax collections, continued their strong growth over the prior year, and this trend speaks to the uptick in jobs, consumer activity and inflation.”

From January to March, the number of employed Virginians increased by 42,000, ranking Virginia 14th among the states for employment growth during that time. The labor participation rate in Virginia has improved slightly, but Virginia’s drop in labor participation since the start of the pandemic remains among the worst in the nation.